AvidXchange Announces Third Quarter 2023 Financial Results

--Strong Q3’23 year over year (Y-O-Y) revenue growth, yield and unit cost-driven gross margin expansion and operating leverage fuel strong financial performance

--Q3’23 Y-O-Y net income loss of $(8.1) million sharply lower vs. loss of $(25.4) million while non-GAAP net income loss swings positively to a profit of $5.8 million from a loss of $(11.7) million

--Q3’23 adjusted EBITDA swings positively and sharply to $11.4 million from a loss of $(3.7) million

--Raising full year 2023 business outlook

CHARLOTTE, N.C., Nov. 08, 2023 (GLOBE NEWSWIRE) -- AvidXchange Holdings, Inc. (Nasdaq: AVDX), a leading provider of accounts payable (AP) automation software and payment solutions for middle market businesses and their suppliers, today announced financial results for the third quarter ended September 30, 2023.

“Our solid third quarter financial results highlight continued strong operational execution across all key levers of the business. On key financial measures, from revenue growth to gross margin to EBITDA, we exceeded – significantly in some instances – our implied third quarter business outlook. Furthermore, we maintained our strong balance sheet, which we believe provides us additional optionality to accelerate our long-term path of progress. Our value proposition for cost containment and reduction continues to have tremendous resonance with our B2B middle market customers. And the recent integration partnership with AppFolio, a real estate focused provider of solutions with a base of 19,000 customers, is a great testament to that recognition and the large addressable market opportunity ahead of us. And while it is unclear how the macro cross currents play out, we remained focused on executing strategies that we believe will position us to achieve our medium and long-term Rule of 40 and 40-plus targets,” said Michael Praeger, CEO & Co-Founder of AvidXchange.  

Third Quarter 2023 Financial Highlights:

  • Total revenue was $98.7 million, an increase of 19.7% year-over-year, compared with $82.4 million in the third quarter of 2022.
  • GAAP net loss was $(8.1) million, compared with a GAAP net loss of $(25.4) million in the third quarter of 2022.
  • Non-GAAP net income was $5.8 million, compared with a Non-GAAP net loss of $(11.7) million in the third quarter of 2022.
  • GAAP gross profit was $62.3 million, or 63.2% of total revenue, compared with $47.6 million, or 57.8% of revenue in the third quarter of 2022.
  • Non-GAAP gross profit was $69.1 million, or 70.0% of total revenue, compared with $53.5 million, or 65.0% of revenue in the third quarter of 2022.
  • Adjusted EBITDA was $11.4 million compared with $(3.7) million in the third quarter of 2022.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables following the financial statements in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Measures and Other Performance Metrics."

Third Quarter 2023 Key Business Metrics and Highlights:

  • Total transactions processed in the third quarter of 2023 were 19.2 million, an increase of 6.4% from 18.0 million in the third quarter of 2022.
  • Total payment volume in the third quarter of 2023 was $19.6 billion, an increase of 8.4% from $18.1 billion in the third quarter of 2022.
  • Transaction yield in the third quarter of 2023 was $5.15, an increase of 12.7% from $4.57 in the third quarter of 2022.

Full Year 2023 Financial Outlook

As of November 8, 2023, AvidXchange anticipates its Full Year 2023 revenue and adjusted EBITDA to be in the following ranges (in millions):                                                

  Current
FY 2023 Guidance
Previous
FY 2023 Guidance
Revenue $374.5 - $375.5 $368.0 - $370.0
Adjusted EBITDA(1) $22.0 - $23.0 $7.0 - $8.0

(1) A reconciliation of adjusted EBITDA to GAAP net loss on a forward-looking basis is not available without unreasonable efforts due to the high variability, complexity and low visibility with respect to the items excluded from this non-GAAP measure.

These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

Earnings Teleconference Information
AvidXchange will discuss its third quarter 2023 financial results during a teleconference today, November 8, 2023, at 10:00 AM ET. The call will be broadcast simultaneously via webcast at https://ir.avidxchange.com/. Following the completion of the call, a recorded replay of the webcast will be available on AvidXchange’s website. In addition to the conference call, supplemental information is available on the Investor Relations section of AvidXchange’s website at https://ir.avidxchange.com/.

About AvidXchange™
AvidXchange is a leading provider of accounts payable (“AP”) automation software and payment solutions for middle market businesses and their suppliers. AvidXchange’s software-as-a-service-based, end-to-end software and payment platform digitizes and automates the AP workflows for more than 8,800 businesses and it has made payments to more than 965,000 supplier customers of its buyers over the past five years. To learn more about how AvidXchange is transforming the way companies pay their bills, visit www.AvidXchange.com.

Forward-Looking Statements
This press release may contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. In this context, forward-looking statements generally relate to future events or our future financial or operating performance and often contain words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “outlook,” “project,” “estimate,” “expect,” “future,” “likely,” “may,” “should,” “will” and similar words and phrases indicating future results. The information presented in this press release related to our expectations of future performance, including guidance for our revenue and EBITDA for the full year 2023, statements related to our ability to achieve our medium and long-term Rule of 40 and Rule of 40-plus targets, our continued strong operational execution, our customers’ perception of the value proposition associated with our products and services, our addressable market opportunity, the role our balance sheet plays in accelerating long-term growth, the impact of the macroeconomic environment on our business, and other statements that are not purely statements of historical fact, are forward-looking in nature. These forward-looking statements are made on the basis of management’s current expectations, assumptions, estimates and projections and are subject to significant risks and uncertainties that could cause actual results to differ materially from those anticipated in such forward-looking statements. We therefore cannot guarantee future results, performance or achievements.

Factors which could cause actual results or effects to differ materially from those reflected in forward-looking statements include, but are not limited to, the risk factors and other cautionary statements described, from time to time, in AvidXchange’s filings with the Securities and Exchange Commission (“SEC”), including, without limitation, AvidXchange’s Annual Report on Form 10-K, Quarterly Report on Form 10-Q filed for the periods ended March 31, 2023 and June 30, 2023, Quarterly Report on Form 10-Q to be filed for the period ended September 30, 2023, and other documents filed with the SEC, which may be obtained on the investor relations section of our website (https://ir.avidxchange.com/) and on the SEC website at www.sec.gov. Any forward-looking statements made by us in this press release are based only on information currently available to us and speak only as of the date they are made, and we assume no obligation to update any of these statements in light of new information, future events or otherwise unless required under the federal securities laws.

Non-GAAP Measures and Other Performance Metrics
To supplement the financial measures presented in our press release and related conference call in accordance with generally accepted accounting principles in the United States (“GAAP”), we also present the following non-GAAP measures of financial performance: Non-GAAP Gross Profit, Adjusted EBITDA, and Non-GAAP Net Income (Loss).

A “non-GAAP financial measure” refers to a numerical measure of our historical or future financial performance or financial position that is included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in our financial statements. We provide certain non-GAAP measures as additional information relating to our operating results as a complement to results provided in accordance with GAAP. The non-GAAP financial information presented herein should be considered in conjunction with, and not as a substitute for or superior to, the financial information presented in accordance with GAAP and should not be considered a measure of liquidity. There are significant limitations associated with the use of non-GAAP financial measures. Further, these measures may differ from the non-GAAP information, even where similarly titled, used by other companies and therefore should not be used to compare our performance to that of other companies.

We have presented Non-GAAP Gross Profit, Adjusted EBITDA, and Non-GAAP Net Income (Loss) in this press release. We define Non-GAAP Gross Profit as revenue less cost of revenue excluding the portion of depreciation and amortization and stock-based compensation expense allocated to cost of revenues. We define Adjusted EBITDA as our net loss before depreciation and amortization, impairment and write-off of intangible assets, interest income and expense, income tax expense (benefit), stock-based compensation expense, transaction and acquisition-related costs expensed, change in fair value of derivative instrument, non-recurring items not indicative of ongoing operations, and charitable contributions of common stock. We define Non-GAAP Net Income (Loss) as net loss before amortization of acquired intangible assets, impairment and write-off of intangible assets, stock-based compensation expense, transaction and acquisition-related costs expensed, change in fair value of derivative instrument, non-recurring items not indicative of ongoing operations, acquisition-related effects on income tax, and charitable contributions of common stock. Non-GAAP income tax expense is calculated using our blended statutory rate except in periods of non-GAAP net loss when it is based on our GAAP income tax expense. In each case, non-GAAP income tax expense excludes the effects of acquisitions in the period on tax expense.

We believe the use of non-GAAP financial measures, as a supplement to GAAP measures, is useful to investors in that they eliminate items that are either not part of our core operations or do not require a cash outlay, such as stock-based compensation expense. Management uses these non-GAAP financial measures when evaluating operating performance and for internal planning and forecasting purposes. We believe that these non-GAAP financial measures help indicate underlying trends in the business, are important in comparing current results with prior period results and are useful to investors and financial analysts in assessing operating performance.

Investor Contact:

Subhaash Kumar
Skumar1@avidxchange.com
813.760.2309

AvidXchange Holdings, Inc.
Unaudited Consolidated Statements of Operations
(in thousands, except share and per share data)
 
    Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
    2023     2022     2023     2022  
Revenues   $ 98,680     $ 82,411     $ 276,656     $ 230,175  
Cost of revenues (exclusive of depreciation and amortization expense)     30,767       29,890       90,461       86,676  
Operating expenses                                
Sales and marketing     18,735       20,241       58,946       57,928  
Research and development     24,754       21,997       72,616       62,176  
General and administrative     25,002       24,042       75,345       62,704  
Depreciation and amortization     9,051       8,365       26,515       24,384  
Total operating expenses     77,542       74,645       233,422       207,192  
Loss from operations     (9,629 )     (22,124 )     (47,227 )     (63,693 )
Other income (expense)                                
Interest income     5,100       2,031       14,820       2,906  
Interest expense     (3,428 )     (5,209 )     (10,106 )     (15,261 )
Other income (expense)     1,672       (3,178 )     4,714       (12,355 )
Loss before income taxes     (7,957 )     (25,302 )     (42,513 )     (76,048 )
Income tax expense     134       69       339       207  
Net loss   $ (8,091 )   $ (25,371 )   $ (42,852 )   $ (76,255 )
Net loss per share attributable to common stockholders, basic and diluted   $ (0.04 )   $ (0.13 )   $ (0.21 )   $ (0.39 )
Weighted average number of common shares used to compute net loss per share attributable to common stockholders, basic and diluted     202,526,844       198,234,392       201,338,550       197,710,104  


AvidXchange Holdings, Inc.
Unaudited Consolidated Balance Sheets
(in thousands, except share and per share data)
 
    As of September 30,     As of December 31,  
    2023     2022  
Assets                
Current assets                
Cash and cash equivalents   $ 339,932     $ 350,563  
Restricted funds held for customers     1,226,216       1,283,824  
Marketable securities     100,643       110,986  
Accounts receivable, net of allowances of $3,866 and $3,123, respectively     40,892       39,668  
Supplier advances receivable, net of allowances of $1,313 and $1,872 respectively     10,203       10,016  
Prepaid expenses and other current assets     13,414       12,561  
Total current assets     1,731,300       1,807,618  
Property and equipment, net     101,463       103,892  
Operating lease right-of-use assets     1,903       2,343  
Deferred customer origination costs, net     27,499       28,284  
Goodwill     165,921       165,921  
Intangible assets, net     88,583       98,749  
Other noncurrent assets and deposits     4,129       5,189  
Total assets   $ 2,120,798     $ 2,211,996  
Liabilities and Stockholders' Equity                
Current liabilities                
Accounts payable   $ 18,759     $ 13,453  
Accrued expenses     46,878       73,535  
Payment service obligations     1,226,216       1,283,824  
Deferred revenue     12,526       12,063  
Current maturities of lease obligations under finance leases     305       477  
Current maturities of lease obligations under operating leases     1,593       1,380  
Current maturities of long-term debt     6,425       6,425  
Total current liabilities     1,312,702       1,391,157  
Long-term liabilities                
Deferred revenue, less current portion     15,373       17,487  
Contingent consideration, less current portion     70       70  
Obligations under finance leases, less current maturities     62,340       61,974  
Obligations under operating leases, less current maturities     3,627       4,657  
Long-term debt     74,898       75,912  
Other long-term liabilities     3,385       3,295  
Total liabilities     1,472,395       1,554,552  
Commitments and contingencies                
Stockholders' equity                
Preferred stock, $0.001 par value; 50,000,000 shares authorized, no shares issued and outstanding as of September 30, 2023 and December 31, 2022     -       -  
Common stock, $0.001 par value; 1,600,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 202,896,081 and 199,433,998 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively     203       199  
Additional paid-in capital     1,665,887       1,632,080  
Accumulated deficit     (1,017,687 )     (974,835 )
Total stockholders' equity     648,403       657,444  
Total liabilities and stockholders' equity   $ 2,120,798     $ 2,211,996  


AvidXchange Holdings, Inc.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
 
    Nine Months Ended September 30,  
    2023     2022  
Cash flows from operating activities                
Net loss   $ (42,852 )   $ (76,255 )
Adjustments to reconcile net loss to net cash used by operating activities                
Depreciation and amortization expense     26,515       24,384  
Amortization of deferred financing costs     326       1,018  
Provision for credit losses     2,118       3,751  
Stock-based compensation     31,181       23,767  
Accrued interest     1,509       1,765  
Loss on fixed asset disposal     -       36  
Accretion of investments held to maturity     (4,091 )     (1,123 )
Deferred income taxes     158       162  
Changes in operating assets and liabilities                
Accounts receivable     (2,221 )     (9,493 )
Prepaid expenses and other current assets     (851 )     (2,337 )
Other noncurrent assets     1,369       (1,061 )
Deferred customer origination costs     785       (66 )
Accounts payable     4,679       167  
Deferred revenue     (1,650 )     (511 )
Accrued expenses and other liabilities     (27,588 )     6,097  
Operating lease liabilities     (378 )     (165 )
Total adjustments     31,861       46,391  
Net cash used in operating activities     (10,991 )     (29,864 )
Cash flows from investing activities                
Purchase of marketable securities held to maturity     (262,994 )     (310,025 )
Proceeds from maturity of marketable securities held to maturity     277,428       213,872  
Purchases of equipment     (1,001 )     (2,677 )
Purchases of real estate     -       (767 )
Purchases of intangible assets     (11,898 )     (20,363 )
Supplier advances, net     (1,309 )     (4,699 )
Net cash provided by (used in) investing activities     226       (124,659 )
Cash flows from financing activities                
Proceeds from the issuance of long-term debt     -       2,367  
Repayments of long-term debt     (1,219 )     -  
Principal payments on finance leases     (435 )     (666 )
Proceeds from issuance of common stock     1,452       828  
Proceeds from issuance of common stock under ESPP     1,178       602  
Debt issuance costs     (743 )     -  
Payment of acquisition-related liability     (100 )     (344 )
Payment service obligations     (57,607 )     (314,603 )
Net cash used in financing activities     (57,474 )     (311,816 )
Net decrease in cash, cash equivalents, and restricted funds held for customers     (68,239 )     (466,339 )
Cash, cash equivalents, and restricted funds held for customers                
Cash, cash equivalents, and restricted funds held for customers, beginning of year     1,634,387       1,805,163  
Cash, cash equivalents, and restricted funds held for customers, end of period   $ 1,566,148     $ 1,338,824  
Supplementary information of noncash investing and financing activities                
Right-of-use assets obtained in exchange for new finance lease obligations   $ 81     $ 689  
Right-of-use assets obtained in exchange for new operating lease obligations     362       2,831  
Common stock issued as contingent consideration     -       344  
Property and equipment purchases in accounts payable and accrued expenses     939       1  
Interest paid on notes payable     3,889       8,134  
Interest paid on finance leases     4,386       4,323  


AvidXchange Holdings, Inc.
Unaudited Reconciliation of GAAP to Non-GAAP Measures
(in thousands)
 
    Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
    2023     2022     2023     2022  
Reconciliation from Revenue to Non-GAAP Gross Profit and Non-GAAP Gross Margin:                                
Total revenues(1)   $ 98,680     $ 82,411     $ 276,656     $ 230,175  
Expenses:                                
Cost of revenues (exclusive of depreciation and amortization expense)     (30,767 )     (29,890 )     (90,461 )     (86,676 )
Depreciation and amortization expense     (5,574 )     (4,924 )     (16,157 )     (13,930 )
GAAP Gross profit(1)   $ 62,339     $ 47,597     $ 170,038     $ 129,569  
Adjustments:                                
Stock-based compensation expense     1,144       1,010       3,552       3,130  
Depreciation and amortization expense     5,574       4,924       16,157       13,930  
Non-GAAP gross profit(1)   $ 69,057     $ 53,531     $ 189,747     $ 146,629  
GAAP Gross margin(1)     63.2 %     57.8 %     61.5 %     56.3 %
Non-GAAP gross margin(1)     70.0 %     65.0 %     68.6 %     63.7 %
                                 
Reconciliation from Net Loss to Non-GAAP Net Income (Loss):                                
Net loss(1)   $ (8,091 )   $ (25,371 )   $ (42,852 )   $ (76,255 )
Exclude: Provision for income taxes     134       69       339       207  
Loss before taxes(1)     (7,957 )     (25,302 )     (42,513 )     (76,048 )
Amortization of acquired intangible assets     3,623       3,623       10,870       10,952  
Stock-based compensation expense     11,229       8,718       31,181       23,767  
Transaction and acquisition-related costs     -       3       (7 )     280  
Non-recurring items not indicative of ongoing operations(2)     773       1,343       4,408       1,286  
Total net adjustments(1)     15,625       13,687       46,452       36,285  
Non-GAAP income (loss) before taxes     7,668       (11,615 )     3,939       (39,763 )
Non-GAAP tax expense(3)     1,909       69       981       207  
Non-GAAP net income (loss)(1)   $ 5,759     $ (11,684 )   $ 2,958     $ (39,970 )
                                 
Reconciliation from Net Loss to Adjusted EBITDA:                                
Net loss(1)   $ (8,091 )   $ (25,371 )   $ (42,852 )   $ (76,255 )
Depreciation and amortization     9,051       8,365       26,515       24,384  
Interest income     (5,100 )     (2,031 )     (14,820 )     (2,906 )
Interest expense     3,428       5,209       10,106       15,261  
Provision for income taxes     134       69       339       207  
Stock-based compensation expense     11,229       8,718       31,181       23,767  
Transaction and acquisition-related costs     -       3       (7 )     280  
Non-recurring items not indicative of ongoing operations(2)     773       1,343       4,408       1,286  
Adjusted EBITDA(1)   $ 11,424     $ (3,695 )   $ 14,870     $ (13,976 )
                                 
(1)The three months ended September 30, 2023 includes a favorable out of period adjustment of $1,507 primarily related to recognition of deferred revenue.  
(2)For the three and nine months ended September 30, 2023, this amount is comprised of response costs, including professional services and legal fees, incurred in connection with the cybersecurity incident that was detected in April 2023, net of insurance recoveries. For the three and nine months ended September 30, 2022, includes $1,621 of restructuring costs and a benefit of $308 for a liability release related to the FastPay acquisition that closed in July 2021.  
(3)Non-GAAP tax expense is based on the Company's blended tax rate of 24.9% in periods the Company has Non-GAAP income before tax. In periods the Company is in a non-GAAP loss position, tax expense is based on GAAP tax expense.  

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11/08/2023 11:45

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